Supreme Court To Review CAFC's Test For Willful Infringement
The Supreme Court has elected to take up two cases involving the objective prong of Seagate’s willfulness test—Stryker Corp v. Zimmer Inc., 782 F.3d 649 (Fed. Cir. 2015), and Halo Electronics Inc. v. Pulse Electronics Inc., 769 F.3d 1371 (Fed. Cir. 2015).
In Stryker, the district court found that the defendant Zimmer had willfully infringed when it “all but instructed its design team to copy” the patentee’s product. But the Federal Circuit reversed, essentially holding that because Zimmer’s trial defenses were “not unreasonable,” its infringement could not be deemed “willful”—no matter how egregious Zimmer’s pre-trial behavior. Stryker, 782 F.3d at 661.
Similarly in Halo, the Federal Circuit held that because the defendant Pulse had presented reasonable (albeit unsuccessful) defenses at trial, its infringement was not “willful” as a matter of law. The Patent Owner Halo argued that the trial defenses are irrelevant to whether Post’s infringement was willful because Post had contrived them after the fact. Halo noted that when Pulse was first given notice of its infringement, "the Pulse engineer only performed a cursory review of the Halo patents and Pulse did not rely on that analysis to assess whether it was infringing a valid patent." Halo, 769 F.3d at 1371. The Federal Circuit rejected these arguments, stating - “the state of mind of the accused infringer is not relevant to this objective inquiry.” Halo, 769 F.3d at 1382.
These applications of the Seagate test for willfulness contradict the Federal Circuit’s en banc ruling on Question 4 in Knorre Bremse—that the existence of a substantial defense at trial should not “per se” defeat a charge of willfulness. Knorr-Bremse v. Dana Corp., 383 F.3d 1337, 1346 (Fed. Cir. 2004). At the time of the Seagate decision, it was not certain that Seagate’s “objective” prong would trump the Court's prior ruling on question 4 of Knorre Bremse. But Stryker and Halo show that it has, confirming the fear expressed by Judge Newman in her Seagate concurrence:
It cannot be the court’s intention to tolerate the intentional disregard or destruction of the value of the property of another, simply because that property is a patent; yet the standard of “recklessness” appears to ratify intentional disregard. In re Seagate, 497 F.3d 1360, 1384 (Fed. Cir. 2007).
Given the Supreme Court’s reasoning in Octane Fitness on the related issue of attorney fees for bad behavior, I expect that the Supreme Court will at least make comparable changes to the CAFC’s treatment of willfulness.